In the $35 million agreement, Cline will subscribe for 437.5 million common shares at 8c per share.
Portpool will subscribe a deposit of $2.5 million to Cline by the end of the week, and the remainder by April 19.
Cline Mining will issue warrants to Portpool to purchase up to an additional 125 million common shares, exercisable for two years at a price of $0.10 per share, subject to expiry acceleration.
If all of the shares are issued, Portpool will own approximately 61.3% of Cline’s common shares.
The proceeds from the transaction will be used to meet the company’s outstanding bond obligations and provide adequate funding for the company to resume operations at its New Elk project in Colorado.
To enact the restructuring, Cline applied for an exemption from shareholder approval on the basis of financial hardship. On December 18, the company announced it was unable to make a semi-annual payment of interest on its bonds in the amount of $US2.5 million because of financial difficulties associated with the suspension of operations at its New Elk metallurgical coal mine in Colorado.
The transaction is an alternative to “the Marret Plan” restructuring transaction with Marret Asset Management, announced in December 2012. It was agreed that the plan would not be carried out if alternative arrangements were available.
Portpool Investments is a Singapore based private investment company whose primary shareholder is a business consortium with ties to end users in India.
Cline’s metallurgical coal property interests are located in British Columbia, Canada and Colorado.
It also has an iron ore property in Madagascar and the Cline Lake gold property in northern Ontario.